The Unique Needs of the Consumer Goods Sector

Almost everything we touch or consume or use in society is a consumer good. Bicycles, refrigerators, jewelry, clothing, etc. Consumer goods are products bought for and used by consumers, rather than by manufacturers for making other goods. The sale of consumer items is big business. Consumer spending represents 69 percent of the U.S. economy. Two-thirds of that figure is on services (such as housing and healthcare). However, a full one-quarter is spent on non-durable goods like clothing and groceries with the remaining portion on durable goods, like cars and appliances.  

The National Retail Federation estimates retail industry sales will grow between 3.8 and 4.4 percent this year, buoyed by economic growth. 

Deloitte’s 2018 Consumer Products Industry Outlook Report reports that “the US economy is likely to continue to grow at a moderate 2.0–2.5 percent rate into 2018. A key source of strength is consumers, who have benefitted from a strong labor market and rising incomes. Unemployment is at a record low of 4.2 percent, with an average of about 148,000 jobs added every month. Real disposable personal income is up, albeit slowly, by 1.8 percent in 2017, and is likely to pick up momentum next year, rising by more than 2.0 percent.” 

Unique Challenges of the Consumer Good Sector 

The transport of consumer goods presents unique logistical challenges. Non-durables must be transported quickly – and frequently. Fast-moving consumer goods (perishables, trendy items, items linked to promotions and product rollouts) are subject to certain operational constraints – some of which are controllable and some of which are not (highly variable outbound logistics).  

Customers control the choices and the buying process.

Durables, along with non-durables, are affected by the extra pressures of the “New Customer”  – a customer that is more aware, more demanding and who holds higher expectations than we have ever seen before. These expectations relate to the availability of products (on the shelf, i.e., no out of stocks) and timely, free, traceable delivery (for home shipment). Customers control the choices and the buying process.

A well-developed digital presence across platforms and channels – consumer-centric, smart-phone focused –  is what will drive future sales.  

Shopping patterns and distribution networks are changing. Some customers go to bricks and mortars stores to do their consumer research, then order online from the same store or rival. Others make their purchase in-store after engaging in online comparison shipping. In-store purchasing remains strong, but there is more choice for the consumer. A twofold presence for retailers (in-store and online) is becoming mandatory. A new trend is for stores to partially function as fulfillment centers for online orders. A well-developed digital presence across platforms and channels – consumer-centric, smart-phone focused –  is what will drive future sales.  

Where 3PLs Come In 

Many larger consumer goods firms have historically relied upon in-house logistics. Now they are turning to third party-logistics providers (3PLs) in droves, joining the ranks of smaller brands of consumer goods that do not have the same in-house distribution capabilities and are more familiar with outsourced relationships. Ninety percent of Fortune 500 companies operating in the US sought out help from a third party logistics provider in 2017 (up from 46% in 2001). 

Because 3PLs are nimble, they are able to juggle the B2C needs of the new world of consumer goods logistics well. They are uniquely suited to help firms cope with the rising costs of freight.

Unique advantages of 3PLS in the field include: 

  1. Consolidation – combining loads from closely located suppliers to keep logistics costs down.
  2. A network of resources – such as warehousing spaces and flexible transportation fleets. 
  3. Economies of scale – derived from an increase in handled items (leading to better productivity). 
  4. Technology – a robust proprietary software that can integrate complex supply chain ecosystems in a manner comparable to a leading enterprise.

BlueGrace uses proprietary technology to enable you to proactively identify opportunities to alleviate costs and optimize your supply chain. Fill out the form below or call us today to see how we can help simplify your distribution needs! 

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